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Energy Resources Division

Paul Proudfoot, Director

The Energy Resources Division is responsible for implementation of 2008 Public Acts 286 and 295 as amended by Public Acts 341 and 342, which were signed into law in December 2016. Act 295 is called the Clean and Renewable Energy and Energy Waste Reduction Act and is intended to promote the development of clean, renewable energy and conservation through energy waste reduction efforts. The law has set a 35% target for meeting the state’s electric needs by 2025, through energy waste reduction and renewable energy.

The Division’s Act 286 responsibilities include evaluating certificate of necessity filings, administration of Michigan’s gas and electric customer choice programs, electric resource adequacy and modeling and integrated resource planning. The Division also has federal responsibility relating to wholesale energy markets, transmission and the Public Utility Regulatory Policies Act of 1978.

The Energy Resources Division is made up of five sections: Energy Waste Reduction, Generation Certificate of Need, Renewable Energy, Resource Adequacy and Retail Choice, Energy Markets, and Smart Grid.

The energy waste reduction standard requires Michigan energy providers to assist their customers in saving energy each year. Electric and gas savings targets are based on the utility provider’s prior year’s sales and are set at 1% each year for investor owned utilities, and 0.75% each year for gas utilities. All cooperatives and municipal electric providers must legislatively save 1% per year through 2021.

Generation Certificate of Need Section: The Generation & Certificate of Need Section conducts review and analysis of Certificate of Necessity applications for construction and investment in electric generation and Certificate of Public Convenience and Necessity applications for transmission siting pursuant to Public Act 30 applications filed by an electric utility in a contested case proceeding

Certificate of Necessity may be filed for construction, investment or power purchase agreements (PPA) with a cost of $100 million or more. Applicants demonstrate need through the development of an Integrated Resource Plan (IRP) included with the application or through an IRP that has been previously approved by the Commission. The utility is guaranteed recovery of its capital expenditures through the regulatory rate recovery process. The utility must file an annual status report, (or more frequent reports at the discretion of the MPSC), including cost and schedule information for the approved project. An electric utility may submit an application for any of the following:

Construction of a new generation facility (fossil, nuclear or renewables),

Purchase or make a significant investment in an existing facility, or,

Enter into a power purchase agreement (PPA); all projects or PPA’s costing $100 million or more for period of 6 years or more with costs allocated to Michigan retail customers.

Electric transmission companies shall submit an application for a Certificate of Public Convenience and Necessity pursuant to the Electric Transmission Line Certification Act, Public Act 30 of 1995, for major transmission lines 5 miles or more with a supply voltage of 345 kilovolts or more. Electric transmission companies may submit an application for smaller projects at their discretion.The Commission shall grant or deny the application for a certificate not later than 1 year after the application’s filing date.

The renewable energy standard requires Michigan electric providers to achieve a retail supply portfolio that increases from 10% in 2015 to 15% in 2021. There is an interim compliance requirement of 12.5% in 2019 and 2020. The Commission issued an order on March 28, 2017 in Case No. U-18525 et al, providing filing dates for each electric provider to file a renewable energy plan describing how the new renewable energy standard will be achieved.

2016 PA 342 includes a new distributed generation program and directs the Commission to establish the program. The distributed generation program is for customers who install certain on-site grid-connected, renewable generation. Qualifying renewable generation projects must be no larger than 150 kW. Larger methane digesters may also participate. The project may generate up to 100% of a customer’s annual electricity consumption. See the Commission’s distributed generation program webpage for more information.

2016 PA 342, Sec. 61 directs electric providers to offer customers the opportunity to participate in a voluntary green pricing program. Electric providers whose rates are regulated by the Commission must have their programs approved by the Commission. The Commission issued an order with filing dates for these electric providers on March 28, 2017 in Case No. U-18349 et al. See the Commission’s voluntary green pricing programs webpage for more information.

2016 Act 341, Section 6v requires the Commission to conduct a proceeding at least every five years to ensure that procedures and rate schedules, including avoided cost rates, are just and reasonable based on PURPA and Federal Energy Regulatory Commission regulations implementing PURPA.

2016 PA 341, Section 6w, requires all electric providers to demonstrate to the

MPSC that they have enough resources to serve the anticipated needs of their customers four years into the future through an annual capacity demonstration filing. If a provider cannot or chooses not to arrange generating capacity to meet the new requirements, they can instead rely on the local utility to provide this service and their customers would be subject to the state reliability mechanism (SRM) capacity charge.

2016 PA 341, Section 6t, requires rate-regulated electric utilities to submit integrated resource plans (IRP) to the MPSC for review and approval. The MPSC collaborated with the Michigan Agency for Energy (MAE) and the Department of Environmental Quality (DEQ) to set modeling parameters and assumptions for each electric utility to use in filing their IRPs.

Alternative electric and gas suppliers are required by law to obtain a license from the MPSC to serve customers within Michigan. Suppliers must abide by any applicable law and utility tariffs.

Energy Markets Section: The Energy Markets Section is responsible for advising and representing the Michigan Public Service Commission (MPSC) on electricity and gas policy and technical issues of importance to Michigan in federal and regional agencies and forums, including regional transmission organizations (RTOs) such as the Midcontinent Independent System Operator (MISO) and PJM Interconnection (PJM). These two RTOs are the neutral and independent groups regulated by FERC that operate the competitive high-voltage wholesale electricity system and markets in all or parts of over 30 U.S. states. This section:

Monitors RTO and Michigan-entity filings and prepares Commission action recommendations and briefings on the issues raised by these filings.

Coordinates and provides technical expertise for the Attorney General Public Service Division counsel in dockets at the Federal Energy Regulatory Commission (FERC) and other federal agencies and departments, such as the U.S. Department of Energy.

Represents the Commission in the RTO stakeholder processes.

Represents the Commission in state regional committees (the Organization of MISO States (OMS) and the Organization of PJM States (OPSI)) that represent the state regulatory agencies in the MISO and PJM stakeholder processes.

Support the work of Commissioners in their OMS and OPSI Board of Directors work,

Provide technical expertise to MPSC staff on regional issues and electric system modeling.

The Smart Grid Section: The Smart Grid Section is responsible for reviewing and evaluating the reasonableness and prudence of utility proposals for smart grid projects, including advanced meters, dynamic rate structures, load control, information technology, cybersecurity and distribution system applications. Smart Grid Section staff members perform research and serve as liaisons to utilities and other stakeholders for enabled technology issues including advanced metering infrastructure (AMI) functionality, interoperability standards, intersection of AMI and operation management systems, variable rate pricing and pre-pay programs enabled by AMI, electric vehicles, and distributed energy resource integration on to the grid.